Having brought in all the costs of the not-for-profit sector, we feel pretty confident that we have set the fixed fees at a realistic and reasonable level, and I shall say why in a minute. However, let me first make a further point, which was ventilated over the summer and which needs dealing with. There is no threat to the vulnerable from the proposed fixed fees. Such people are currently seen and advised, and the cost of the advice that they get and the care that they need is already in the current budget. That budget will remain the same, but will just be distributed in a different way. The fixed fees therefore take account of vulnerable people, and they are, rightly, not under threat from the proposed change to the structure.

Annette Brooke (Mid-Dorset and North Poole) (LD):
On that point, I have received representations on behalf of relatively small practices in Dorset that act for mental health patients. Could the Minister give me any specific reassurances about the likely effects on such small practices?

Vera Baird:
I went to the Mental Health Lawyers Association annual general meeting and had conversations there about the issue. We agreed to look again at the nature of the proposed mental health fees, and that process is in place. There will be proposals in due course, which will apply to suppliers across the board, whether large or small.

The Way Ahead fees, which are based on the average costs for the various cases handled by solicitors and not-for-profit providers, are reasonably well placed. Analysis shows that about 62 per cent. of providers across the board would have been paid more for their last years case loads under the new fixed fee scheme than they would under the old scheme. The point of changing to fixed fees is to motivate efficiencies; indeed, productivity has gone up exponentially, and I must express my great respect for the sector for achieving that. We therefore have every hope that, long before the new fees come inthey have, of course, been put back to October to facilitate the processmany more suppliers will comfortably be doing their work for less than the fixed fees or the same sort of price.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab):
The Minister said that 60 per cent. of cases will generate more income, and that is the key point, which I suspect will be reiterated several times by those who are lucky enough to catch your eye, Sir Nicholas. Our core pointcertainly for those on the Labour Benchesis that the 40 per cent. of cases that do not generate more income will be disproportionately concentrated in areas where providers deal with the most vulnerable people and the most complex cases. Sadly, we have not yet heard any convincing evidence to lead us to believe otherwise.

Vera Baird:
That is not, on the face of it, the case at all. My hon. Friends constituency, for instance, is very deprived, but about 51 per cent. of the suppliers in her constituency now do such work at below the fixed fee rates, so her argument does not follow at all. There are suppliers in the regions who cost more for the same job than suppliers in London, there are suppliers in some areas of London who cost more than those in other 11 Jan 2007 : Column 166WH
areas and there are suppliers who cost less. It is not, therefore, about regions, but about costs and about rolling out best practice so that we can get the best and the most out of all suppliers. We are reasonably confident that we have pitched the fees at roughly the right level.

Ms Barlow:
My hon. and learned Friend is comparing region with region and supplier with supplier, but in child custody cases, in which one parent could afford to pay an unlimited amount, while the other was bound by a fixed fee, the interests of the child might not be equally represented.

Vera Baird:
There will be graduated fees in child cases to represent the various stages of such cases. Again, the budget will not be any different from what it is now; it will simply be a matter of ensuring that the graduations are appropriate proxies for the complexities of individual cases, and that is what is being worked on. There may always be an imbalance between what somebody is paid as a privately instructed lawyer and what somebody is paid on legal aid, but I am afraid that that has ever been thus. There is no reason to think that what is happening will make it worse. Indeed, if we are right and bidding will lead to better profitability, it could improve things.

Productivity has increased by 19 per cent. in the not-for-profit sector so far this yearand this year is not over yetbuilding on productivity increases in the previous two years. By spreading best practice the Legal Services Commission and the Advice Services Alliance, which represents not-for-profit suppliers and is hugely helpful in this context, will encourage all providers to take on a full range of cases of varying levels of complexity, which will make the fees sustainable for all the relevant providers.

The fees in question are not those that were proposed at the time of Carter. It is imperative that people take on the changes that we have made, having listened to the consultation process, and let their minds be at rest. We have delayed the introduction of fixed fees for civil work until October to allow for those productivity increases to continue and to allow time for the not-for-profit sector to adjust to the new regime.

Very complex cases taken by solicitors or the not-for-profit sector in the civil sphere, which will take three times as many hours as the ordinary fixed fee represents, will come out of the fixed fee system entirely, to be paid for by the hour. Those are the exceptional cases which, I think, were wrongly included in the quoted usual costs of cases, as I mentioned earlier. Something that is very complex will be dealt with completely outside the system and be supervised by the Legal Services Commission on an hour-by-hour basis.

Mr. Slaughter rose

Peter Bottomley (Worthing, West) (Con) rose

Vera Baird:
I shall give way first to my hon. Friend.

Mr. Slaughter:
I take the point about complex cases; but we are really talking about complex people, who take a long time to deal with. In London 75 per cent. of 11 Jan 2007 : Column 167WH
people who go to providers of the kind in question may have English as a second language. That point has not been properly dealt with. Hon. Members have the same experience in their surgeries, and I am sure that my hon. and learned Friend the Minister will know of it first hand. That is not being addressed.

Vera Baird:
It is being addressed. I have made the position clear. The fees incorporate all the time that is currently spent, as necessary, by not-for-profit sector bodies and solicitors on vulnerable people who do not have English as their first language. All that time is wrapped up in the budget, which remains the same and is cut into fixed fees, instead of being paid by the hour. I assure my hon. Friend of that, and, further, of something that I have said more than once alreadythat there are now suppliers in his constituency who are doing the work in question, with the difficult people to whom he referred, for a lower cost than the new fixed fees.

Peter Bottomley:
The Minister has explained that the proposals made in the summer were not right, and that they have been adjustedpresumably because of representations. Representations are being made today as well. Perhaps the Minister has seen the debate pack usefully compiled by the House of Commons Library, so can she explain how people can move from a fixed fee to an hourly rate? An illustrative example is given in the debate pack of how solicitors went through a lot of unused evidence that the prosecution eventually decided to disclose. Only after an incredible amount of work did they find that the accused person had not done what they were accused of doing. Is permission necessary to move to an hourly rate? How is that to happen?

Vera Baird:
It would depend on the category of case. The case cited by the hon. Gentleman sounds like a very high-cost one. I did not note that item in the debate pack. A very high-cost case would already be completely outside the fixed fee system; subject to a contract link with the Legal Services Commission, a supervisor would supervise it and all the work necessary would have to be screened through the LSC beforehand so that it could be established that it was necessary for the good conduct of the case. That is how the hon. Gentlemans example sounds to me. The other cases that will come out of the fixed fee system will be those that are complex and will take much longer than could realistically be paid for on a fixed fee. That will happen more in London, where there are more complex casesabout 10 per cent. of cases in London are categorised as complex, compared with about 2 per cent. nationwide. Such cases must be dealt with on an hourly rate because of their complexity.

Simon Hughes:
Perhaps I may ask a regional question. The Legal Services Commission accepted, as I understand it, the argument for London weighting, for all the reasons that everyone concerned with public spending understands. Am I right in understanding from what the Minister has said that there is no general London weighting on the fixed fee system, or any such general weighting in this region or anywhere else with particularly high city or regional costs?

11 Jan 2007 : Column 168WH

Vera Baird:
The fee is a national fee. It is the same wherever the work is done. I am sure that I have already said that there are suppliers in London doing the work more cheaply than suppliers in the regions, and that this is a matter of efficiencies, not regions. We consider that the fixed fees are set at a level that will facilitate good service supply in London as well.

Good as our legal aid system is, there has not yet been a Government who have secured an effective legal aid system that provides all the advice and assistance necessary for all the needy people who require it. The reforms give us the best chance of achieving that. I repeat that they are not cost-cutting reforms. They are about getting value for money. Since without the discipline of fixed fees the legal aid budget will continue to grow exponentially, I must make it clear that the alternative to spending taxpayers money more effectively in this way would be cuts in eligibility for the civil scheme and cuts in its scope. I do not want to be involved in such a process, which would be to the detriment of the needy people on whose behalf almost everyone who has so far intervened in the debate has been speaking. The Government, too, intend to serve those needy people, as do practitioners. Rather than damaging their interests, the changes will improve the availability of legal provision to them.

Several hon. Members rose

Sir Nicholas Winterton (in the Chair):
This is a three-hour debate and the Government opening speech has lasted three minutes short of an hour for which I do not blame the Minister at all. It was so long because of the large number of interventions that she took. I make a plea to hon. Members to speak as briefly as possible, without detracting from the quality of their speech or affecting what they want to say. Let us have short speeches. Ten hon. Members hope to be called, and others who have not written in may also try to catch my eye.

3.28 pm

Mr. Henry Bellingham (North-West Norfolk) (Con):
I declare my interest as a barrister who did legal aid work in the past. I welcome the debate in Government time, although it is regrettable that it is not in the main Chamber. There are 25 Members here, which is I suggest probably many more than are in the Chamber for the debate on social exclusion.

Everyone agrees that action is needed to control the criminal legal aid budget, and I want first to discuss criminal legal aid in general terms, before considering civil legal aid. The cost is up 37 per cent. from 1997 to more than £2 billion, as the Minister pointed out, and I want to consider the drivers of that increase. Lawyers fees are certainly not responsible, because standard and non-standard fees, taken together, are up 1.7 per cent. since 2001. I suggest that the increase in the legal aid budget is largely due to the increased volume of cases, changes in procedure and changes in the rules of evidence. Of course, there has also been a very big increase in the number of criminal offences on the statute book. Indeed, in a speech made by the Minister herself in 2005, when as a Back Bencher she secured an Adjournment debate in Westminster Hall, she pointed out that 700 new offences had been created since 1997. 11 Jan 2007 : Column 169WH
In fact, June Venters QC pointed out in a recent speech that since 1997 there have been 3,000 new criminal offences. That obviously puts great pressure on the criminal system, because the Government go on legislating.

Mr. Khan:
Will the hon. Gentleman give way?

Mr. Bellingham:
I shall make progress, if I may.

Defendants must of course have justice. Indeed, in a speech on 24 October 2006, June Venters said:

Legal aid is there to ensure that vulnerable and disadvantaged people are not denied access to justice because of their inability to pay.

The Lord Chancellor in a speech the other day to the Law Society said:

Free access to justice for those who need legal aid is as integral to the welfare state as the NHS or state education.

I think that we would all agree.

I shall quickly consider the impact of means-testing on magistrates courts. It is ironic that the drivers behind the increases in the legal aid budget do not come from the magistrates courts, but mainly from the Crown court. However, the means-testing arrangements are having an impact on the magistrates courts as we speak. That is a matter for concern. Most solicitors support the principle of means-testing, but they have always stressed that the new means test must enable legal aid to be granted or refused quickly. That manifestly is not happening.

I recently received a letter from a large firm of solicitors in SheffieldHowells, the Citizens Solicitor. The firm made it clear that the new arrangements for means-testing are extremely bureaucratic and cumbersome. I shall not go into detail, Sir Nicholas, as you have told us to make progress, but it points out that the Department for Constitutional Affairs did not take account of representations made by the solicitors who deal with such cases day in, day out at the sharp end.

The Minister talks about the most vulnerable, and in her press release this morning she made it clear that vulnerable people would not be affected. The New Policy Institute report headed Means testing in the magistrates court: is this really what Parliament intended? was published on 5 December. It highlighted the case of a lone parent with a child aged 10. The parent was working full-time at the minimum wage of £5.35 an hour but will not be eligible for criminal legal aid because of a boost to her family income from tax credits. If that is not affecting the vulnerable, I really do not know what is. That is exactly the sort of person who we should be trying to protect and help. Is that what the Minister intended? Is it what she meant today in her press release?

The result, as we have heard, is that many firms will close or amalgamate. Many of the firms in my constituency are not in criminal legal aid to make money; they are doing it through conviction, as a service, because they believe in the ethos of trying to protect those in society who have real problems and crises. That was very much the message that I received from those firms. There will certainly be legal aid deserts, especially in rural areas.

11 Jan 2007 : Column 170WH

Furthermore, in my judgment, there is no question but that the bidding process and the best-value procedures will lead to bigger firms, and the consolidation and closure of small firms. We should not be in any doubt that the larger firms will cost more. It is the smaller, more focused firms with dedicated partners who historically and traditionally offer the best value for money. For instance, in 2005 and 2006, Otterburn Legal Consulting carried out two large surveys of criminal firms and concluded that the smaller firms with lower overheads and dedicated staff who work long hours offer the best value for money. The larger firms cost more, and ultimately they will cost the Government more in criminal aid. That is ironic.

I take on board the points made by the right hon. Member for Leicester, East (Keith Vaz) and the hon. Members for Tooting (Mr. Khan) and for Hackney, South and Shoreditch (Meg Hillier) about the black and minority ethnic firms. Many are small businesses, but they have a great commitment to the communities that they serve. By definition, they probably do not want to consolidate or merge or even expand; they want to remain small and to serve their communities in their inimitable way. I also take on board the points made about legal aid advice centres.

If you do not mind, Sir Nicholas, I shall quote a colleague. My hon. Friend the Member for Isle of Wight (Mr. Turner) has recently been very ill. He suffered an unpleasant stroke, but mercifully he is now much better. I spoke to him by telephone last night. He asked me to tell the House that, in his judgment, the supplier base for legal aid on the Isle of Wight is threatened by the current proposals. He said that if the base is eroded too far, there will be no choice, which will create further serious problems, with conflicts of interest. The problem affects all areas, but it will have a particular impact on the island, given the logistical difficulties of getting people over from the mainlandor the high cost that his poorer constituents will face in getting to the mainland. He pointed out the risk that under the Governments proposals the Isle of Wight will become an advice desert. It is important that his comments are taken on board, particularly at this time.

The public defender service pilot schemes clearly show that the cost of the PDS is between 40 and 90 per cent. more than the cost of private law firms providing the same criminal defence services to the public. I find that a matter of concern, and it shows that big is not necessarily beautiful.

When considering criminal legal aid, I wonder whether the Ministers reintroduction of means-testing with such a bureaucratic system is really how the Government want to help the vulnerable. I am sure that she does not need reminding that, during an Adjournment debate in October 2005, she argued cogently and passionately that the budget for criminal legal aid cannot be capped. I know that she has taken the Queens shilling and gone native, but, for goodness sake, does she not trust her instinctsor is she just doing what her boss is telling her? I leave it to others to draw their own conclusions.